Towards A New Vision of Capital...

[Robert Searle]

 

Readers might like to comment on my evolving project on Transfinancial Economics which offers a radical new way of thinking about capital, or  money in this context. There is a p2pfoundation link to it.

 

http://www.p2pfoundation.net/Transfinancial_Economics

 

 

R.Searle. 

[Sepp Hasslberger]

"At the present time there are huge growing global problems. These include food security, poverty alleviation, population growth, and most notably global warming which if largely unchecked could lead to gargantuan economic costs, and massive loss of life." "Thus, urgently tackling something like global warming/climate change in the Developing World, and indeed, in the Developed World would be a serious possibility. Obviously, if this is largely non-repayable capital, some kind of manual checks, and/or electronic ones could be used to ensure that it is correctly spent."

The belief that global warming is occurring and warrants urgent action seems to be one of the basic premises of your economic proposal. I would for sure de-emphasize global warming, which is fast losing currency. There has been fraudulent massaging of the data by global warming advocates and there is an absence of actual scientific evidence that emission of CO2 does cause an appreciable change of global temperatures. There also does not seem to have been any actual increase in global temperatures for about a decade now. Some articles and other references to global warming which I have collected and which show that different viewpoint, are here

http://blog.hasslberger.com/2006/11/manmade_global_warming_the_deb....

"The ideal as far as possible is to bring about a high degree of "simultaneous" growth so that supply, and demand are largely in "equilibrium"."

There are some who would argue that it is the tendency of today's economic set-up to promote continuous growth of the economy that is at the bottom of humanity's appalling environmental footprint. Would you really want to perpetuate that growth meme by making it a central tenet of a new economy?

"Those projects which are commerciallly unviable but vital to the world would receive the "right" subsidies, grants, and interest free loans created ofcourse out of new non-repayable money."

What, I wonder, would be the criteria to decide what is a "unviable but vital to the world" commercial activity?

"It is expected that banks, and banking will remain largely in the private sector in spite of the Global Financial Crisis. They could be nationalized in full, or in part but this is not a serious issue in TFE. However, they could have special powers to create, and transmit new non-repayable money to certain businesses (notably those serious about becoming environmentally friendly but where there is little, or no commercial viability ofcourse), and also ofcourse repayable interest free credit. The interest would not be paid for by customers but by the Central Bank, or some independent public authority."

You would have to decide whether to give non-repayable money to businesses (and NGOs) or to people. In my view, it would be better to give such money to people because
1) businesses are supposed to be profitable by reason of what they produce or sell, rather than depend on subsidies and
2) if the end users do not have money to buy what is on offer, you have subsidized businesses but starving citizens, not a very appealing possibility, and finally
3) why would you continue to give interest to the banks, if their creation of money is, as you point out elsewhere, really "out of thin air"... ?

"Inflation legislation would replace taxation regulations. The former would involve by law highly accurate electronic accounting by most businesses. One common form of it are the electronic registers at checkouts at supermarkets (ie. EPOS/ Electronic Point of Sales as mentioned earlier on). Depending on the commercial situation lap top computers, mobile phones, and other like devices could also be used in this process. Thus, business people, and/or their staff would by law have to ideally on a daily basis report their transaction accounts electronically to the inflation department of the bank which could in part, or in full be overseen by the public Inflation Authority."

If an inflation charge was to supplant taxation, how high would such a charge have to be to allow for government spending, even if the spending was reduced below current levels, and who would have to pay that inflation charge?

Businesses reporting to bank inflation departments would seem an awful lot of administration and would necessitate a huge machinery of control. I am not sure that this would be smart.

- - -

In summary, your proposal for a Transfinancial Economy reminds me in some way of the proposal Silvio Gesell made in his "Natural Economic Order", which is available in English here

http://en.wikipedia.org/wiki/The_Natural_Economic_Order

except that Gesell's proposal is more socially oriented because he would distribute money not to businesses but to individuals. He also envisions much less of a controlled situation, where free enterprise could prosper rather than be pressed into price and inflation controls.

I believe it would be profitable for you to study Gesell's proposal and work out similarities and differences, and then look over your own proposal with a view to changing it to make it a more realistically implementable proposal.

[Robert Searle]

Thank you for your response. Here, are my answers in brief.



i) Inspite of "climate-gate" it should stand to reason that greenhouse gases must be having some effect on the atmosphere which could lead to very serious problems. Most scientists would probably still agree with this claim. Furthermore, let us suppose it were just some kind of hoax it would still be highly irresponsible to do little, or nothing...because if it were true we would be depriving suceeding generations of their future well-being on planet earth....!


ii) Ofcourse, there are those who suggest a steady state economy, or a "degrowth" one. However, if we are to seriously tackle green issues then it is quite clear that there has to be a period of growth to fund various green technologies. This could possibly in time lead to less growth, or even "zero growth" when most of the planet has been sorted in this respect.


iii) I agree that ideas of "small is beautiful", and people living in self-sustaining based communities "free" from big business, and governments are excellent ideas. In TFE people with such notions of saner, more sustainable living could also receive grants along with specific NGOs with which they may have a connection. All this fine, and good.

However, for the bigger issues, and bigger changes businesses need to be empowered both by new regulation, and subsidies where necessary especially in connection with green technologies. With TFE there would also be support for the poor. How this would manifest depends on governments, NGOs, and individuals...and in most if not all cases the money would always be there to spur things on.

The reason why banks could continue to receive interest but in an unorthodox fashion is simply the fact that to try, and seriously introduce TFE it would be best to have the rich, and powerful on your side otherwise it would be very difficult. Ideally, such private commercial operations should only receive an operating cost for their credit creation, and ofcourse, ideally no interest added.


iv) An Inflation Charge, or Deduction (paid for by the business concerned) would depend on incoming data from the real economy. A banks computer could send an alert if there were serious price changes of a product, or products. However, this is unlikely to happen because if enough new unearned money is created in the economy it will not seriously upset supply, and demand. This is ofcourse dependent on a highly accurate electronic accounting/transaction data from businesses, and also by computer simulations of the real economy itself.

Ofcourse, a simpler system could be used in which for example simple manual checks could be involved in which companies could just report any serious price changes to the inflation department. But this would not give us a highly accurate understanding of the workings of the real economy such as the supply, and demand for certain products, the amount of resources used, etc.

It should also be said that there would be little in the way of administration as much of the accounting/transaction process relies on simple electronic data transmissions.


v) Yes, I am well aware of Gesells proposal but I am more concerned with the bigger picture rather the community based type initiatives which will take many decades to be accepted on a global scale...if this is meant to happen ofcourse.